On December 12, 2016, EPA published the final Formaldehyde Standards For Composite Wood Products Rule (the Rule) in the Federal Register. The compliance date for most aspects of the Rule is December 12, 2017, with a sell-through provision for wood composite products manufactured or imported prior to that date. The Rule limits formaldehyde emitted into the air from certain composite wood products, which are products made by binding strands, particles, fibers, veneers, or boards of wood together with adhesives. Domestic and foreign companies operating in the U.S. use composite wood products to manufacture a wide variety of consumer products such as furniture, flooring, cabinets, children’s toys, and more.

Suppliers of composite wood products and items containing composite wood products—including all manufacturers, importers, fabricators, suppliers, distributors, and retailers—must comply with the following emission standards for HWPW, PB, and MDF to be offered for sale in the United States:

HWPW (made with a veneer core or a composite core) = 0.05 ppm

PB = 0.09 ppm

MDF = 0.11 ppm

Thin MDF = 0.13 ppm

The effective date for these emissions limits is December 12, 2017, one year following final publication of the Rule, subject to limited exceptions. Producers of laminated products have until December 12, 2023 to comply with the Rule’s emission standard for HWPW.[2]

Applicability & Scope

The emission standards apply to any defined composite wood product in the form of a panel or a component part, or incorporated into a finished good. The Rule applies to all entities along the supply chain, including importers, distributors, retailers, panel producers, fabricators, TPCs, and accreditation bodies. The EPA’s Summary of Provisions (pp. 89675-89676) unpacks the major compliance obligations particular to each type of supplier. Like CARB’s Composite Wood Products Measures, the Rule imposes robust compliance obligations on panel producers (manufacturers), but softens obligations down the supply chain, with the least burden imposed on distributors and retailers of finished goods.

Exclusions apply to certain types of products and goods made therefrom. For example, any “finished good” that has been previously sold or supplied to a good faith purchaser for purposes other than resale, including antiques and secondhand furniture, is not subject to emissions limits imposed by the new Rule. Structural plywood and structural panels, as specified in National Institute of Standards & Technology (NIST) Voluntary Product Standards are likewise exempt.[3] Further, certain products made with no-added-formaldehyde-based resins and ultra-low-emitting formaldehyde resins are exempt from the Rule, such as hardboard, oriented strand board, structural composite lumber, and more. Renovators and construction contractors that sell, remodel, or renovate buildings containing composite wood products are not covered by the Rule, and neither are new vehicles (other than recreational vehicles), new rail cars, new boats or new aircraft.

Notably, the Rule does not contain a wholesale exemption for laminated products, which some have viewed as closure of a loophole left by CARB in its Composite Wood Products Measures. Rather, the Rule distinguishes between exempt and non-exempt sorts of laminated products.[4] As indicated in the Compliance Chart below, before the December 12, 2023 manufactured-by date, laminated product producers must use compliant composite wood product platforms.[5] After that date, producers of exempt laminated products must keep, as a condition of the exemption, records demonstrating eligibility for the exemption. Producers of non-exempt laminated products will have to comply with the full emissions testing and certification requirements for HWPW as of December 12, 2023.

Sell-Through and Stockpiling of Non-Compliant Products

The Act allowed EPA, in developing the final Rule, to incorporate “sell-through regulations” that permit the continued sale of non-compliant products produced or imported before the compliance date. EPA set the compliance date one year after the final rule’s publication, or December 12, 2017.

To prevent circumvention of the new limits by over-producing prior to the compliance date, the Rule prohibits sale of “stockpiled” inventory, defined as manufacturing or purchasing of non-compliant products at a rate 20 percent or greater above 2009 annual average levels at any time during the period between passage of the Act on July 7, 2010, and the effective date of the Rule on December 12, 2017. To enforce the rule against sale of stockpiled inventory, EPA must find that the producer increased production for the specific purpose of circumventing the Rule’s emissions standards.

Third-Party Certification

All panel producers, as well as laminated product producers subject to the December 12, 2023 compliance date, are required to have their products certified by an EPA-approved TPC that tests samples of the products for compliance with the emissions standards. Panel producers are also required to conduct quality control testing to ensure that regulated composite wood products meet emissions standards. TPCs or their laboratories must test their panel producers’ composite wood products quarterly.[6] TPCs must also perform quarterly inspections of producers’ products and records, and where a certified product fails a quarterly test, certifications for all products represented by the failing sample must be suspended until a compliant quarterly test is obtained.

Required Precautions for Non-Producers

Importers, fabricators, distributors, and retailers must take “reasonable precautions” to ensure that the composite wood products they supply or offer for sale comply with the Rule’s emission standards. Importers, who are subject to the strictest precautionary requirements, must demonstrate that they have taken reasonable precautions by maintaining bills of lading, invoices, or comparable documents that include a written statement of compliance from their suppliers. Importers must maintain these documents for three years, and must make available to EPA upon 30 days’ notice (1) records identifying the panel producer and the date the composite wood products were produced, and (2) records identifying the supplier (if different) and the date the composite wood products, component parts, or finished goods were purchased.[7] Down the supply chain, for three years following the date of import, purchase or shipment, all fabricators, distributors, and retailers can demonstrate reasonable precautions by obtaining bills of lading, invoices, or comparable documents containing a statement of compliance from the supplier.

Civil and Criminal Penalties for Violators

Any individual or entity that violates any requirement under the Rule is deemed to have committed a “prohibited act” under TSCA Section 2614, and is therefore subject to strict liability civil penalties not to exceed $37,500 for each day a violation persists. TSCA also allows for heightened penalties for certain categories of violators. An individual or entity that commits a “knowing or willful” violation of the Rule is subject to additional criminal penalties, including imprisonment up to a year and daily criminal fines of up to $50,000 on top of any assessed civil penalties. In limited circumstances, violations of the Rule could also trigger prosecution under TSCA’s felony endangerment provision, which provides for a maximum daily fine of $250,000 and up to 15 years imprisonment where a knowing and willful violator causes “imminent danger of death or serious bodily injury” to an individual.

Potential Implications

Given the breadth of obligations under the Rule and potential exposure to substantial monetary penalties for violations, suppliers of composite wood products and finished goods are advised to develop compliance strategies to be prepared for the Rule’s compliance dates, beginning December 12, 2017. This includes compliance with the Rule’s certification, recordkeeping and labeling requirements as well as the emissions limitations.

Of note, by operation of a White House memorandum issued January 20, 2017, the effective date of the Rule is postponed from February 10, 2017 to March 21, 2017, to give the new administration review opportunity. This creates potential that there will be amendments and/or further delay to the Rule. However, because many in the industry have desired a consistent standard nationally, there may be little if any change, making it advisable to assume the deadlines and requirements of the Rule will remain as shown in the Summary of Provisions.

Reportedly, the White House also has ordered a communications blackout for EPA (which may be lifted by the time of publication of this article) and a freeze on grants and external contractors. This may delay issuance of EPA guidance for compliance with the Rule, beyond that already available, increasing need to carefully review and analyze the Rule’s provisions and their applicability to one’s circumstances.

Stakeholders might begin by surveying the Compliance Chart reproduced below, as well as EPA’s Fact Sheet and EPA guidance materials. EPA also has released notices for upcoming Rule Requirements Webinars during January and February 2017 directed variously at the general public and targeted stakeholders groups.

Panels must be labeled with the producer’s name (or other identification), lot number, TPC number, and a statement of compliance with TSCA Title VI

(40 CFR 770.45)

December 12, 2017

Records, including testing, production, purchaser, transporter, and non-complying lot information, must be kept for 3 years Records demonstrating initial eligibility for reduced testing or a limited third-party certification exemption for products made with NAF-based or ULEF resins must be kept for as long as exemption eligibility is claimed (40 CFR 770.40)

December 12, 2017

Producers of Laminated Products That Are Not Exempt From the Definition of

Hardwood Plywood

Bills of lading, invoices, or comparable documents must be obtained and maintained for 3 years (40 CFR 770.30, 770.40)

December 12, 2017

Finished goods must be labeled with the producer’s name, the date the good was produced, and a statement of TSCA Title VI compliance (40 CFR 770.45)

Producers of Laminated Products That Are Exempt From the Definition of

Hardwood Plywood

Records demonstrating purchase/use of compliant platforms and NAF or PF resins and bills of lading, invoices, or comparable documents must be obtained and maintained for 3 years (40 CFR 770.40)

December 12, 2023

Bills of lading, invoices, or comparable documents must be obtained and maintained for 3 years (40 CFR 770.30, 770.40)

December 12, 2017

Finished goods must be labeled with the producer’s name, the date the good was produced, and a statement of TSCA Title VI Compliance (40 CFR 770.45)

December 12, 2017

Fabricators (Other Than Laminated Product Producers)

Bills of lading, invoices, or comparable documents must be obtained and maintained for 3 years. (40 CFR 770.30, 770.40)

December 12, 2017

Finished goods must be labeled with the producer’s name, the date the good was produced, and a statement of TSCA Title VI Compliance (40 CFR 770.45)

December 12, 2017

Importers

Bills of lading, invoices, or comparable documents bearing a statement of TSCA Title VI compliance must be obtained and maintained for 3 years. In addition, must have the ability to make records identifying the panel producer, the date the products were produced, the supplier (if different) and the date the products were purchased available to EPA within 30 calendar days of request (40 CFR 770.30, 770.40)

[2] Noting, however, that non-exempt producers of laminated products are still subject to recordkeeping, labeling, and other non-emissions requirements applicable to “fabricators” as of December 12, 2017.

[4] Specifically, laminated products made by attaching a wood or woody grass veneer to a core platform consisting of compliant MDF, compliant PB, or compliant veneer, with either a phenol-formaldehyde resin or a resin formulated with no added formaldehyde as part of the resin cross-linking structure, are exempt. See 40 C.F.R. § 770.4.

[5] All producers of laminated products, whether exempt or nonexempt, must still comply with recordkeeping and labeling requirements as of December 12, 2017. 40 C.F.R. § 770.02.

[6] Rules specifies use of test method ASTM E1333–10 or, with a showing of equivalence, test method ASTM D6007–02. Testing can be performed on-site if the appropriate equipment is available.

[7] On or after December 12, 2018, importers of composite wood products must also comply with the certification regulations for importation of chemical substance in bulk, as required by TSCA. Id. § 770.30(d); see also 19 C.F.R. §§ 12.118-12.127.

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